Cisco: We're moving our $67 billion cash pile to the U.S.

Another mountain of money is being brought home to American shores following the new tax law -- and much of it will e...

Posted: Feb. 14, 2018 9:30 PM

Updated: Feb. 15, 2018 9:33 AM

Another mountain of money is being brought home to American shores following the new tax law -- and much of it will end up in the pockets of investors.

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Tech company Cisco said Wednesday it plans to repatriate $67 billion in foreign profits in the coming months.

The Silicon Valley firm, which makes gear for computer networks, said it will pass on a significant chunk of that cash to its shareholders over the next two years through share buybacks and increased dividends.

In total, Cisco investors are set for a windfall of about $44 billion.

The new rules also mean companies can no longer avoid paying taxes on past international profits by holding the cash outside the U.S. They must pay tax on the money whether they bring it back to the country or not.

Moody's estimated in November that U.S. companies were holding about $1.4 trillion in cash offshore. Five large tech companies -- Microsoft, Apple, Google, Oracle and Cisco -- accounted for nearly $600 billion of that.

Supporters of the tax changes had argued that giving companies an incentive to bring the money home could boost the U.S. economy by promoting hiring and investment. But critics said Main Street wouldn't feel the effect because many companies would opt to reward shareholders with dividends and stock buybacks.

That appears to be what Cisco is doing. And its announcement pleased investors: the company's stock was up almost 7% in after hours trading.

On Wednesday, Cisco also reported a loss of $8.8 billion for the final quarter of 2017 after it took a multibillion dollar charge related to the tax law.

Other large companies have reported similar big hits to their profits from the new law. Microsoft said last month it would take a $13.8 billion tax charge. It didn't specify whether that was due to the new repatriation rules.